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Russia bans grain exports amid drought

(This article is part of TIMES EXPRESS. It is a condensed version of a story that will appear in tomorrow's New York Times.)

c.2010 New York Times News Service@

MOSCOW — Prime Minister Vladimir V. Putin on Thursday banned all exports of grain after millions of acres of Russian wheat withered in a severe drought, driving up prices around the world and pushing them to their highest level in two years in the United States.

The move was the latest of several abrupt interventions in the Russian economy by Putin, who called the ban necessary to curb rising food prices in the country. Russia is suffering from the worst heat wave since record-keeping began here more than 130 years ago.

''We need to prevent a rise in domestic food prices, we need to preserve the number of cattle and build up reserves for next year," Putin said in a meeting broadcast on television. "As the saying goes: Reserves don't make your pocket heavy."


During his years as president and prime minister, Putin has never hesitated to marshal the power of the state to protect Russian economic interests, and this decision showed that this has remained his prerogative even after he stepped down as president.

The export ban was widely seen as one of a series of populist moves by Putin to address rising resentment over the calamitous heat wave and the fires it has spawned.

Pressure was also brought to bear by multinational grain trading companies, which have been lobbying for the ban as a way to escape futures contracts drawn up before the drought, when prices were far lower.

Wheat prices have soared by about 90 percent since June because of the drought in Russia and parts of the European Union, as well as floods in Canada, and the ban pushed prices even higher. Exports from Ukraine, another major exporter, are down sharply this year.

Russia, the largest grain-exporting nation before World War I, has largely recovered from failed Soviet agricultural policies, lifted by rising global food prices and economic reforms that encouraged private farmers and companies to once again till the country's expansive and fertile croplands. Before this year's drought, yields had risen steadily, and Russian grain exports totaled 21.4 million metric tons last year, about 17 percent of the global grain trade.

Putin said that the government might extend the ban if the harvest yields even less than the current grim forecasts. The projected yield is about 70 million metric tons of grain, according to the Russian Grain Union, a lobbying group for farmers, about equal to domestic needs and down sharply from last year's total of 97 million metric tons.

Owing to last year's bumper crop, Russia currently holds about 24 million metric tons in grain elevators, the group said.

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